Commentary: Help Our Small Businesses Weather the Storm (May, 2020)

by John McClaughry

            A major and depressing casualty of the COVID-19 economic lockdown is the calamitous effect it is having on small business, especially retail, entertainment, and restaurant firms and the service market of electricians, plumbers, and other skilled tradespeople. Massive Federal aid spending, such as unemployment payments and the Paycheck Protection Program,  provide  welcome short term relief, but they won’t last forever.

On the brighter side, numerous individual and community based efforts are springing up to help small businesses stay alive. Some of these can and should survive well into the future, when the economy has struggled back to something resembling normal. Here are some creative ideas that can be put into place without any drain on tax dollars.

First, people can make it a point to buy at locally owned businesses. For example, I could easily have ordered a couple of shotgun cases from WalMart or Amazon, but instead I called my local gun store. The owner will get them for me, perhaps for a couple of dollars more than the retail giants, but he’ll answer any questions I might have.  I’ll have to travel 8 miles to pick them up when they come in, but that will give me a chance to talk about olden times, like when his grandfather built our house in 1970.

 Second, this is a time to take part in Community Supported Agriculture. Buy products from the farm stands, and at the Farmers Markets. Your contribution to the Vermont Community Foundation’s COVID Response Fund will pay for gallons of fresh Vermont milk delivered by the Vermont Food Bank –milk that farms would otherwise have to dump because of oversupply.

Third, if you’re a small business creditor or lessor, and can afford to do it, take the initiative to offer to let the business postpone its payments for six months or a year. If you can do it, that’s a lot better than waiting for the business person to come to you pleading for help.

Fourth, buy gift cards from local businesses. That puts cash in their drawer, but also increases the liability side of the business’s books. If you forget about the card, then it’s (eventually) a welcome gift, but ordinarily you’ll come in and use the card for a meal or a purchase.  A variation is to put cash on their table and run a tab against it.

My local newspaper is helping by advertising the availability of local business gift cards. You go online at deals.caledonianrecord.com , select and pay for the gift card with your credit card. The program collects your payment, transfers it to the business, and sends coupons to your computer for future use.

Fifth, take this one step further.  A worker-owned company in Winnipeg, Manitoba offers a buy-local loyalty cell phone app called The Local Frequency. Every dollar you spend at a participating local business earns future discount savings at any of those businesses. That way the businesses don’t have a gift card liability hanging over their heads. Businesses get cash today and loyal customers get savings by continuing to spend money at the businesses when they reopen. It’s a valuable solution for local businesses with a loyal customer base.

Protegra, the sponsoring company, will help set up a local program. You can watch an explanatory video at https://www.localfutures.ca/for-businesses. If you and your local business organization are serious, contact it at tyler@thelocalfrequency.com.

Finally, there are local currency programs in many cities around the country. Because the goal is to stimulate the local economy, the currency – in effect a local discount coupon – can only be spent at participating businesses in the community. Ithaca Hours (Ithaca NY) and Berkshares (Great Barrington MA) are well-known examples. 

This is not a short-term solution. Establishing a local currency requires an enormous amount of commitment, expertise, and community support, as the creators of Burlington (VT) Bread learned. It started bravely in 1997, but expired in 2007.

For encouraging examples of many bright ideas for stimulating a local economy, buy Michael H. Shuman’s Vermont-published book “The Local Economy Solution: How Innovative Self-Financing ‘Pollinator” Enterprises Can Grow Jobs and Prosperity” (White River Jct., VT: Chelsea Green, 2015).

Your help to get your community’s small businesses through this pandemic crisis will help our local economies emerge stronger and better in the years to follow.  

John McClaughry is vice-president of the Ethan Allen Institute

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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